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on Industrial Competition |
| By: | de Cornière, Alexandre; Taylor, Greg |
| Abstract: | We study mergers between firms operating in data-connected markets: the data generated as a byproduct of the activity on market A can be used by firms operating on market B. The effects of such a merger depend on whether data trade among independent firms is possible, and on whether data use benefits consumers or leads to more surplus extraction. When data increases product B’s quality, the merger benefits consumers on both markets if data cannot be traded absent the merger, and harms them otherwise. When data is used to extract consumer surplus on market B the merger increases consumer surplus on market A and reduces it on market B. |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:129733 |
| By: | Fujisawa, Chieko |
| Abstract: | When firms use advertising to differentiate their products and increase consumer appreciation of their products, the strategy, i.e., price or quantity, depends on the degree of product differentiation and the magnitude of advertising costs. If advertising costs in Bertrand competition are very much lower than advertising costs in Cournot competition, the firms will choose Bertrand competition. If advertising costs in Bertrand competition are comparable to advertising costs in Cournot competition, both firms will choose Cournot competition. If advertising costs in Bertrand competition are lower than those in Cournot competition, and differentiation is, to some extent greater, firms adopt different strategies each other. This is because firms take advantage of the different advertising effectiveness of competitors under the conditions of cost and differentiation increase profitability. There is also a mixed strategy option under these conditions. Furthermore, the differentiation strategy with advertising increases firms' profits and increases consumer surplus and total surplus compared to the case without advertising. |
| Keywords: | Online media advertising, Mass media advertising, differentiation strategy, Cournot competition, Bertrand competition, Duopoly model |
| JEL: | D43 L13 M37 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302462 |
| By: | Bartelsman, Eric (Vrije Universiteit Amsterdam); Dobbelaere, Sabien (Vrije Universiteit Amsterdam); Mattioli, Alessandro Zona (Vrije Universiteit Amsterdam) |
| Abstract: | This paper provides evidence from a natural experiment on the importance of workers' tacit knowledge about firms' intangible assets for competition in product and labor markets. Evidence is presented on product and labor market imperfections across manufacturing and services firms in the Netherlands. Price-cost markups and wage markups are both shown to be positively related to intangible intensity at the firm level. A model is developed of the processes of intangible investment and wage bargaining of heterogeneous firms, providing a mechanism that relates workers' tacit knowledge to firm-level product and labor market imperfections. The model also incorporates a role for non-compete agreements (NCAs) limiting worker mobility. Our main empirical contribution comes from using linked employer-employee panel data with information on NCAs and changes in enforceability of these agreements. Using an event-study framework, we demonstrate that the removal of NCAs leads to higher wages and worker mobility, especially for workers in intangible-intensive firms. We find that NCAs affect workers across the skill distribution. The causal findings from changes in the legality of NCAs correspond with the mechanism described in the model. |
| Keywords: | price-cost markups, rent sharing, technology, tacit knowledge, non-compete agreements |
| JEL: | J41 L10 M52 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17260 |
| By: | Galeotti, A.; Golub, B.; Goyal, S.; Talamas, E.; Tamuz, O. |
| Abstract: | A large differentiated oligopoly yields inefficient market equilibria. An authority with imprecise information about the primitives of the market aims to design tax/subsidy interventions that increase efficiency robustly—i.e., with high probability. We identify a condition on demand that guarantees the existence of such interventions, and we show how to construct them using noisy estimates of demand complementarities and substitutabilities across products. The analysis works by deriving a novel description of the incidence of market interventions in terms of spectral statistics of Slutsky matrices. Our notion of recoverable structure ensures that parts of the spectrum that are useful for the design of interventions are statistically recoverable from noisy demand estimates. |
| Date: | 2024–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:cam:camjip:2425 |
| By: | Dimitri Laroutis (CARE - Centre d'Analyse et de Recherche en Économie - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université, LECOR - Laboratoire d'Economie Rurale - ESITPA - École supérieure d'ingénieurs et de techniciens pour l'agriculture, Métis Lab EM Normandie - EM Normandie - École de Management de Normandie); Philippe Boistel (CERM - Centre de recherche en Risk Management); Max Poulain (NIMEC - Normandie Innovation Marché Entreprise Consommation - UNICAEN - Université de Caen Normandie - NU - Normandie Université - ULH - Université Le Havre Normandie - NU - Normandie Université - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université) |
| Abstract: | With 350 million product references, Amazon is a global e-commerce company which remains omnipresent in a wide range of sectors. We wanted to identify the factors that explain the choice of econsumers in their buying process. Why do they choose Amazon over another commercial site? How can SMEs improve their differentiation against competition from Amazon? Based on a survey conducted among 191 Internet shoppers, we were able to build a model explaining the choice of e-consumers regarding their preferences in terms of consuming online. We thus identified 14 significant variables explaining the behaviour of an e-consumer in his choice of an online commercial site, with influences ranging from -30.38% to +41.5% in the propensity of individuals to choose Amazon. |
| Abstract: | Avec 350 millions de références produit, Amazon constitue une entreprise globale de e-commerce, omniprésente dans un nombre de secteurs incalculable. Nous avons souhaité identifier les facteurs explicatifs du choix des e-consommateurs dans leur démarche d'achat. Pourquoi choisissent-ils Amazon plutôt qu'un autre site marchand ? Comment les PME peuvent elles se différencier pour riposter à Amazon ? Sur la base d'une enquête réalisée auprès de 191 internautes acheteurs, nous avons construit un modèle explicatif du choix des e-consommateurs par rapport à leur site marchand de référence. 14 variables expliquant le comportement du e-consommateur dans son choix de site marchand se sont révélées significatives, avec des influences allant de -30.38% à +41.5% dans la propension des individus à choisir Amazon |
| Keywords: | Digital strategy, Consumer behaviour, Amazon, Stratégie digitale, Comportement du consommateur |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04687303 |
| By: | Harry O'Rahilly (Department of Economics and School of Politics and International Relations, University College Dublin, Dublin, Ireland); Patrick Paul Walsh (Department of Economics and School of Politics and International Relations, University College Dublin, Dublin, Ireland) |
| Abstract: | We model the retail motor fuel market in Ireland in a two-stage market entry game, with exogenous sunk costs in stage one, and price competition with horizontal product differentiation in stage two, utilizing Salop (1979). Using GIS tools, we show how driving times, benchmarked against road distance and straight-line measures, alter estimates of the disutility of traveling between rival locations. We estimate a robust and unbiased long-run equilibrium relationship between mark-ups and market structure, identified by driving times between locations to conduct an ex-post evaluation of a merger and divestment remedies in the retail motor fuel market in Ireland. |
| Keywords: | Market Structure, Performance; Spatial Econometrics |
| JEL: | L10 L38 |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:ucd:wpaper:202404 |
| By: | Francesco Amodio (McGill University); Pamela Medina (University of Toronto); Monica Morlacco (University of Southern California) |
| Abstract: | This paper shows that self-employment shapes labor market power in low-income countries, affecting industrial development. Using Peruvian data, we show that wage-setting power increases with concentration, but less so where self-employment is more prevalent. A general equilibrium model shows that while concentration increases oligopsony power, it also raises labor supply elasticity by pushing workers into self-employment, thereby mitigating labor market power. Conversely, pro-competitive policies that draw workers into salaried jobs may increase labor market power, with limited overall impact. We demonstrate that these policies are only effective if they tackle labor market power. |
| Keywords: | labor market power, monopsony, self-employment, sorting, development |
| JEL: | J2 J3 J42 L10 O14 O54 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:2418 |
| By: | Mikołaj Czajkowski (University of Warsaw, Faculty of Economic Sciences); Wojciech Zawadzki (University of Warsaw, Faculty of Economic Sciences); Grzegorz Bernatek (bAudytel S.A.); Maciej Sobolewski (University of Warsaw, Faculty of Economic Sciences) |
| Abstract: | In this study, we explore the dynamics of consumer choices in the Polish telecommunications market, focusing on preferences and valuations for home fixed, home mobile, and purely mobile internet connections. Key attributes such as speed, latency, data limits, and cost are examined. Central to our research is the investigation of how the integration of 5G technology might influence demand elasticity. Using a detailed discrete choice experiment, we apply a mixed logit model with random parameters to analyze stated choice data, enabling us to unravel the complexities of demand elasticity, especially in terms of own- and cross-price elasticities. This approach facilitates an assessment of the degree of substitutability between fixed and mobile internet services. Our findings indicate a moderate substitution effect between fixed and mobile internet services. Results from a Small but Significant and Non-transitory Increase in Price (SSNIP) test suggest that these markets should continue to be regulated separately, mirroring the distinct regulation observed in fixed and mobile telephony. Furthermore, simulations provide insights into potential future market shifts with the advent of 5G services. This paper contributes significantly to the discourse on fixed-mobile internet substitution and offers vital insights for defining markets in antitrust discussions, competitive agreements, and potential mergers within the telecom sector. |
| Keywords: | Fixed-Mobile Internet Substitution, Consumer Preferences in Telecommunications, Mobile Broadband Access, Home Internet Connectivity, Discrete Choice Analysis, 5G Network Impact, Demand Elasticity in Internet Services, Stated Preference Methodology, Telecommunications Market Analysis, Price Elasticity in Internet Access |
| JEL: | L96 D12 C25 L51 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:war:wpaper:2024-15 |
| By: | Shin, Saehe |
| Abstract: | With the advancement of digital technology, the music industry has undergone significant changes, with music streaming services becoming the primary means of music consumption worldwide. In South Korea, native music streaming platforms like Melon and Bugs have long dominated the market. However, the recent rapid growth of global platforms such as YouTube Music has intensified the competition. This study focuses on adolescent users to analyze the competitive relationships among major music streaming platforms in this competitive environment. Four platforms—YouTube Music, Melon, Genie Music, and Flo—were selected for the study, and a survey was conducted with youth users aged 14 to 18. Based on niche theory, five fulfillment factors were defined: music diversity, recommendation services, additional services, price value, and ease of use. The competitiveness of each platform was analyzed based on these factors. Through this analysis, the study aims to provide strategic implications for South Korean music streaming platforms to achieve sustainable success in the face of global competition. By doing so, it aims to provide strategic insights for South Korean music streaming platforms to achieve sustainable success in competition with global platforms that are gradually increasing their market share. |
| Keywords: | music streaming, music streaming service, music streaming platform, niche analysis, Melon, Genie Music, FLO, YouTube Music |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302476 |
| By: | Congressional Budget Office |
| Abstract: | CBO discusses the factors underlying prescription drug prices and examines a set of policy approaches aimed at reducing those prices. Some of the approaches that CBO examined aim to reduce prices by capping them or limiting their growth; others would reduce prices by promoting price competition or affecting the flow of information. |
| JEL: | I11 I18 L65 O31 |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:cbo:report:58793 |
| By: | Margarita Pavlova |
| Abstract: | In 2014, Russia imposed an import embargo on selected goods, effectively reducing trade flows and decreasing import competition across several industries. In this paper, I analyze the effect of this decrease in product market competition on the gender pay gap in Russia. This research complements the body of evidence which implies that increases in product market competition lead to lower gender pay gaps. The empirical analysis relates 2011-2019 industry-specific gender wage gaps estimated from the Russian Longitudinal Monitoring Survey to the industry-level evolution of import penetration. The results show that a 10 percentage point reduction in import competition leads to an increase of about 4 percentage point in gender pay gap. This increase is smaller in magnitude than the effect found in the US but larger than that observed in some Eastern European countries. This phenomenon partly corresponds to an exacerbation of the gender employment gap driven primarily by high-skilled women leaving industries where import shares, and consequently competition, declined. |
| Keywords: | Gender Pay Gap, Product Market Competition, Russia, Sanctions |
| JEL: | J71 F14 F51 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:cer:papers:wp788 |
| By: | Jeanjean, François |
| Abstract: | The fast technical progress coupled with a fierce competition in telecommunication markets urge operators to invest year after year a huge amount of investment. However, the maturation and saturation of markets prevents them from reaping the benefits. While telecommunication infrastructure improves fastly, the revenues of telecommunication operators tend to stagnate. Content providers are taking advantage of increased network capacity to offer more content that they are able to monetize. It is therefore they who benefit from the increase in network capacities and not the operators who nevertheless financed it. This article develops a theoretical model which highlights this mechanism and corresponds perfectly to empirical observations. |
| Keywords: | Competition, Investment, Telecommunication Operators, Content Providers |
| JEL: | D25 L51 L86 L96 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302486 |
| By: | Andrew J. Hinchberger; Mark R. Jacobsen; Christopher R. Knittel; James M. Sallee; Arthur A. van Benthem |
| Abstract: | The marginal cost of electricity fluctuates hour-by-hour, yet retail customers typically face flat prices. Using data from all seven US wholesale markets and a new method to evaluate alternative rates set in advance that accounts for equilibrium price effects, we estimate efficiency gains from time-varying price schedules that better align price with cost. We have three main results. First, time-of-use rates and critical-peak pricing, the two most common time-varying rate plans, each correct about 10% of mispricing. Second, complex rate structures based on historical prices often backfire. Third, real-time pricing with price ceilings can capture most potential efficiency gains while limiting customer risk. |
| JEL: | L94 L97 Q41 Q48 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32995 |
| By: | DeFusco, Anthony A.; Tang, Huan; Yannelis, Constantine |
| Abstract: | Information asymmetries are known in theory to lead to inefficiently low credit provision, yet empirical estimates of the resulting welfare losses are scarce. This paper leverages a randomized experiment conducted by a large fintech lender to estimate welfare losses arising from asymmetric information in the market for online consumer credit. Building on methods from the insurance literature, we show how exogenous variation in interest rates can be used to estimate borrower demand and lender cost curves and recover implied welfare losses. While asymmetric information generates large equilibrium price distortions, we find only small overall welfare losses, particularly for high-credit-score borrowers. |
| Keywords: | asymmetric information; consumer credit; experiment; Fintech; welfare |
| JEL: | D14 D82 G10 G23 |
| Date: | 2022–12–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:116693 |